Thursday, July 19, 2012

What Can a Bank Do to Satisfy a Deficiency Judgment from a Foreclosure?

Question: We are being sued by our bank. Our property went into foreclosure about five years ago. Can our bank garnish our wages or reach into our personal bank accounts? What can we do to minimize our exposure? We agreed to a payment schedule but never heard anything back. Recently we received new communication from the bank, where they are asking for more documentation, such as personal bank accounts information, property ownership, etc. The first lien holder sold our mortgage to our bank, which retained an attorney to collect the difference between the amount that the property sold for at foreclosure sale and what we owed on our principal balance.

Response: Yes, the bank can go after the deficiency judgment, which in this case appears to be the difference between the amount the property sold for at foreclosure sale and your principal balance. The only way the bank can satisfy this debt is if you have assets, i.e., another property, bank accounts, W-2 job, tax refund from the IRS, etc. If you have no assets, then you are considered judgment proof, meaning that the creditor will not be able to recover anything from you. If you are employed, then up to 10% of your wages can be garnished. Perhaps, you can negotiate with the collection company or the attorney that is pursuing collection of this debt to settle for less. Oftentimes, they will take a lump sum that could be less than half the cost to make it go away.

In the legal blog, Attorney Svetlana Kaplun addresses typical questions our firm has received from our clients, or come across from homeowners related to foreclosure, foreclosure defense, loan modification and bankruptcy topics.

The information contained in the legal blog of Attorney Svetlana Kaplun is for informational purposes only, and should not be construed as a legal advice on any subject matter. Please read our full disclaimer or contact the Law Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115 for more information.
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